Refer to the diagram given below. The above diagram shows the demand for and the supply of Product X.Assume that the market for Product X is competitive.If the supply curve is S₁ and the demand curve is D₀, then:

Question

Quizplus · Accepted Answer

At the intersection point of the supply and demand curve, the equilibrium price and quantity for Product X are determined. However, in this case, the supply curve has shifted to the left, indicating a decrease in the supply of Product X. This results in a new equilibrium point at point F, where the equilibrium quantity has decreased, and the equilibrium price has increased. Therefore, at the new equilibrium price OF, there would be a shortage of AC units, as the quantity demanded (point A) exceeds the quantity supplied (point C).

Refer to the Diagram Given Below